Jerome Powell shared today that the Fed hikes are necessary to curb the 40-year high inflation of the Biden economy but jobs may be lost in the process.
Today Jerome Powell shared that the Fed’s work to reduce the massive Biden inflation will result in job losses.
Speaking after the Fed issued another rate hike, Powell said the U.S. may be able to avert a full-blown recession but could not avoid hardship as the bank ramps up its fight against inflation.
“If we want to light the way to another period of a very strong labor market, we have got to get inflation behind us. I wish there were a painless way to do that. There isn’t,” Powell said.
“We certainly haven’t given up the idea that we can have a relatively modest increase in unemployment. Nonetheless, we need to complete this task,” he added.
Powell addressed reporters after the Fed announced it would increase its baseline interest rate range by 0.75 percentage points, the fifth rate hike this year and third 75 basis point hike in three consecutive monetary policy meetings.Fed officials also projected another 1.25 percentage points of rate hikes before the end of the year, which Powell said would push borrowing costs into a level meant to restrict the economy.
The Fed is attempting to bring inflation back down toward its annual target of 2 percent by slowing the economy and reducing the amount of money spent on goods and services. The bank does so by raising borrowing costs throughout the economy, which gives consumers less flexibility to spend and businesses less room to hire and expand.